War cuts Pakistani software orders by half

Pakistan's fledgling software industry is feeling the heat from war in neighboring Afghanistan, as foreign customers cancel orders based on what industry officials call a mistaken belief that violence is spilling over the border.

Foreign business is down more than 50 percent since the Sept. 11 terrorist attacks on the U.S., said Syed Hamza Matin, president of the Pakistan Software Houses Association (PASHA). Around 10 percent of the roughly 3,000 software engineers working on foreign projects have been sent home by their employers since Sept. 11, he said.

"Life is going on, there is no war going on, but unfortunately in the West there is the impression that there is some unsettlement going on in Pakistan," he said. "That affects the confidence of buyers, and that needs to be changed."

Pakistan has some 200 export-oriented software companies, hoping to follow neighboring India's successes in IT outsourcing. While officials have expressed hope that the media spotlight on Pakistan might raise their profile, business has been hard hit in the short term. One of the country's largest software houses, Network Solutions (Pvt.) Ltd. (Netsol), faces a "disastrous situation," said Sajjad Kirmani, the company's director of IT and operations. The company depends on the U.S. market for 80 percent of its business, he said.

"We are not receiving any new orders; what we are doing currently is basically servicing the existing orders," he said. Many customers are cancelling orders already underway, he said, taking what has already been developed and saying they no longer require the rest.

One of the company's major clients, DaimlerChrysler AG, recently inquired about moving Netsol's development facility out of Pakistan, he said -- in part because travel restrictions imposed by foreign governments make it difficult for executives to visit the country, or for Pakistanis to leave.

"Their business is dependent on us. People have to be able to travel to the DaimlerChrysler operation; they are running their mission-critical facilities. They have every right to be disturbed," he said.

Pakistani IT experts traveling to the U.S. have even been turned away by clients for fear that they might engage in criminal activity, said Ambassador Toheed Ahmad, consul general of Pakistan for IT development in Los Altos, California, who has been working since July to promote U.S. investment in his country.

In one case, Ahmad intervened and had authorities in Pakistan check the rejected employees' backgrounds. Their records came up clean, but the company still hasn't admitted them, he said.

Ahmad agreed that the war in Afghanistan has had no real impact on the Pakistani IT industry's ability to function -- it is purely a matter of perception.

That will not change overnight, said Netsol's Kirmani.

"We are generally considered the people with the beard and clutching Kalashnikovs; this is the image that has been portrayed all over the media," he said. "Even if this war ends, it's going to take time to go to the USA and convince people we are civilized people, we are educated people, and we know the technology."

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